IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20020124.html
   My bibliography  Save this paper

A Joint Framework for Category Purchase and Consumption Behavior

Author

Listed:
  • Rutger van Oest

    (Tilburg University)

  • Richard Paap

    (Faculty of Economics, Erasmus University Rotterdam)

  • Philip Hans Franses

    (Faculty of Economics, Erasmus University Rotterdam)

Abstract

We propose a consistent utility-based framework to jointly explain a household's decisions on purchase incidence, brand choice and purchase quantity. The approach differs from other approaches, currently available in the literature, as it is able to take into account consumption dynamics. In the model, households derive utility from consumption, and they relate their purchase behavior to consumption planning. We illustrate our model for yogurt purchases, and show that our model yields important additional insights. One such insight is that the reservation price of households is not fixed, but depends on the available inventory stock. Furthermore, we find that promotionalactivities increase sales through more purchases in the product category and brand switching, but the effect through larger purchase quantities is limited.

Suggested Citation

  • Rutger van Oest & Richard Paap & Philip Hans Franses, 2002. "A Joint Framework for Category Purchase and Consumption Behavior," Tinbergen Institute Discussion Papers 02-124/4, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020124
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/02124.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Randolph E. Bucklin & James M. Lattin, 1991. "A Two-State Model of Purchase Incidence and Brand Choice," Marketing Science, INFORMS, vol. 10(1), pages 24-39.
    2. Pradeep K. Chintagunta, 1993. "Investigating Purchase Incidence, Brand Choice and Purchase Quantity Decisions of Households," Marketing Science, INFORMS, vol. 12(2), pages 184-208.
    3. Jeongwen Chiang, 1991. "A Simultaneous Approach to the Whether, What and How Much to Buy Questions," Marketing Science, INFORMS, vol. 10(4), pages 297-315.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Franses, Philip Hans, 2006. "Forecasting in Marketing," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 1, chapter 18, pages 983-1012, Elsevier.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nitin Mehta, 2007. "Investigating Consumers' Purchase Incidence and Brand Choice Decisions Across Multiple Product Categories: A Theoretical and Empirical Analysis," Marketing Science, INFORMS, vol. 26(2), pages 196-217, 03-04.
    2. Greg M. Allenby & Thomas S. Shively & Sha Yang & Mark J. Garratt, 2004. "A Choice Model for Packaged Goods: Dealing with Discrete Quantities and Quantity Discounts," Marketing Science, INFORMS, vol. 23(1), pages 95-108, June.
    3. Andrews, Rick L. & Currim, Imran S., 2009. "Multi-stage purchase decision models: Accommodating response heterogeneity, common demand shocks, and endogeneity using disaggregate data," International Journal of Research in Marketing, Elsevier, vol. 26(3), pages 197-206.
    4. Zhang, Qin & Gangwar, Manish & Seetharaman, P.B., 2017. "Polygamous Store Loyalties: An Empirical Investigation," Journal of Retailing, Elsevier, vol. 93(4), pages 477-492.
    5. David R. Bell & Jeongwen Chiang & V. Padmanabhan, 1999. "The Decomposition of Promotional Response: An Empirical Generalization," Marketing Science, INFORMS, vol. 18(4), pages 504-526.
    6. Pradeep Chintagunta & Jean-Pierre Dubé & Vishal Singh, 2003. "Balancing Profitability and Customer Welfare in a Supermarket Chain," Quantitative Marketing and Economics (QME), Springer, vol. 1(1), pages 111-147, March.
    7. Jaehwan Kim & Greg M. Allenby & Peter E. Rossi, 2002. "Modeling Consumer Demand for Variety," Marketing Science, INFORMS, vol. 21(3), pages 229-250, December.
    8. Bhat, Chandra R., 2005. "A multiple discrete-continuous extreme value model: formulation and application to discretionary time-use decisions," Transportation Research Part B: Methodological, Elsevier, vol. 39(8), pages 679-707, September.
    9. Michael Lewis & Yanwen Wang & Chunhua Wu, 2019. "Season Ticket Buyer Value and Secondary Market Options," Marketing Science, INFORMS, vol. 38(6), pages 973-993, November.
    10. Kim, Chul & Jun, Duk Bin & Park, Sungho, 2018. "Capturing flexible correlations in multiple-discrete choice outcomes using copulas," International Journal of Research in Marketing, Elsevier, vol. 35(1), pages 34-59.
    11. Richards, Timothy J. & Gómez, Miguel I. & Pofahl, Geoffrey, 2012. "A Multiple-discrete/Continuous Model of Price Promotion," Journal of Retailing, Elsevier, vol. 88(2), pages 206-225.
    12. Ngobo, Paul-Valentin & Legohérel, Patrick & Guéguen, Nicolas, 2010. "A cross-category investigation into the effects of nine-ending pricing on brand choice," Journal of Retailing and Consumer Services, Elsevier, vol. 17(5), pages 374-385.
    13. Manish Gangwar & Nanda Kumar & Ram C. Rao, 2021. "Pricing Under Dynamic Competition When Loyal Consumers Stockpile," Marketing Science, INFORMS, vol. 40(3), pages 569-588, May.
    14. Gázquez-Abad, Juan Carlos & Martínez-López, Francisco J., 2016. "Understanding the impact of store flyers on purchase behaviour: An empirical analysis in the context of Spanish households," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 263-273.
    15. Bhat, Chandra R., 2008. "The multiple discrete-continuous extreme value (MDCEV) model: Role of utility function parameters, identification considerations, and model extensions," Transportation Research Part B: Methodological, Elsevier, vol. 42(3), pages 274-303, March.
    16. Carpio, Carlos E. & Wohlgenant, Michael K., 2006. "A Structural Econometric Model of Consumer Demand at Pick-Your-Own Fruit Operations," 2006 Annual meeting, July 23-26, Long Beach, CA 21372, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Juin-Kuan Chong & Teck-Hua Ho & Christopher S. Tang, 2001. "A Modeling Framework for Category Assortment Planning," Manufacturing & Service Operations Management, INFORMS, vol. 3(3), pages 191-210, January.
    18. Joonhwi Joo & Ali Hortacsu, 2016. "Semiparametric estimation of CES demand system with observed and unobserved product characteristics," 2016 Meeting Papers 36, Society for Economic Dynamics.
    19. Fleischmann, M. & Hall, J.M. & Pyke, D.F., 2005. "A Dynamic Pricing Model for Coordinated Sales and Operations," ERIM Report Series Research in Management ERS-2005-074-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    20. Thomas J. Steenburgh, 2008. "The Invariant Proportion of Substitution Property (IPS) of Discrete-Choice Models," Marketing Science, INFORMS, vol. 27(2), pages 300-307, 03-04.

    More about this item

    Keywords

    purchase incidence; brand choice; purchase quantity; consumption;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20020124. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.